Hertz 2008 Annual Report Download - page 208

HERTZ GLOBAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
than those that we believe we would have obtained in the absence of such affiliation. It is our
management’s practice to bring to the attention of our Board of Directors any transaction, even if it arises
in the ordinary course of business, in which our management believes that the terms being sought by
transaction participants affiliated with the Sponsors or our Board of Directors would be less favorable to
us than those to which we would agree absent such affiliation.
In the second quarter of 2007, we were advised by ML, an affiliate of one of our Sponsors, that between
November 17, 2006, and April 19, 2007, ML engaged in principal trading activity in our common stock.
Some of those purchases and sales of our common stock should have been reported to the SEC on
Form 4, but were not so reported. ML and certain of its affiliates have engaged in additional principal
trading activity since that time. ML and certain of its affiliates have since filed amended or additional
reports on Form 4 disclosing the current number of shares of our common stock held by ML and its
affiliates. To date, ML has paid to us approximately $4.9 million for its ‘‘short-swing’’ profit liability
resulting from its principal trading activity that is subject to recovery by us under Section 16 of the
Securities Exchange Act of 1934, as amended. In the event that ML or its affiliates (including private
investment funds managed by certain private equity-arm affiliates of ML) sell additional shares of our
common stock in the future, this amount may change. In 2008 and 2007, we recorded $0.1 million, net of
tax and $2.9 million (net of tax of $1.9 million), respectively, in our consolidated balance sheet in
‘‘Additional paid-in capital.’’ In addition, because ML may be deemed to be an affiliate of Hertz Holdings
and there was no registration statement in effect with respect to its sale of shares during this period,
certain of these sales may have been made in violation of Section 5 of the Securities Act of 1933, as
amended.
Note 15—Earnings (Loss) Per Share
Basic earnings (loss) per share have been computed based upon the weighted average number of
common shares outstanding. Diluted earnings (loss) per share have been computed based upon the
weighted average number of common shares outstanding plus the effect of all potentially dilutive
common stock equivalents, except when the effect would be anti-dilutive.
The following table sets forth the computation of basic and diluted earnings (loss) per share (in
thousands of dollars, except per share amounts):
Years ended December 31,
2008 2007 2006
Basic and diluted earnings (loss) per share:
Numerator:
Net income (loss) ............................... $(1,206,746) $264,559 $115,943
Denominator:
Weighted average shares used in basic computation ...... 322,701 321,185 242,460
Add: Dilutive impact of stock options ................. — 4,302 894
Weighted average shares used in diluted computation ..... 322,701 325,487 243,354
Earnings (loss) per share, basic ...................... $ (3.74) $ 0.82 $ 0.48
Earnings (loss) per share, diluted ..................... $ (3.74) $ 0.81 $ 0.48
Diluted earnings (loss) per share computations for the years ended December 31, 2008, 2007 and 2006
excluded the weighted-average impact of the assumed exercise of 16,337,976, 1,645,623 and 11,520
stock options, respectively, as well as 1,285,000 restricted stock units for the year ended December 31,
2008, because such impact would be antidilutive.
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